25AUG2009

Resolution Seeks to Bolster Sales Tax Effort With Commitments

At its lunch meeting Tuesday, City Council discussed the first draft of a resolution that outlines several actions the Council and City will be bound to take should the sales tax pass in November. City Manager Greg Burris said this resolution, modeled closely after one passed by the last Council, is meant to work in concert with the sales tax component now headed for the November ballot, and essentially would enact many of the other recommendations made by the Pension Fund Citizens Task Force, should voters pass the sales tax.

Several Councilmembers also stressed the need to pass such measures in order to build more trust among the public moving forward toward the November vote.

The resolution includes many “Whereas” points outlining the background of the situation before coming to the seven points of action in the meat of the bill, which are:

• Seek voter approval of a dedicated sales tax to bolster the Pension Fund, as recommended by the Pension Fund Citizens’ Task Force. This was passed by Council on Monday as Bill No. 2009-207.

• Pay 30.88 percent of all police and fire employee payroll into the Fund, a 2 percent increase over the 28.88 the City was previously paying. This year the City paid 52 percent of payroll into the Fund as required, an amount the Council, the Task Force and the City Manager have said is unsustainable.

• Increase the amount Tier 1 employees contribute to fund. Negotiations on the exact amount are ongoing between the City Manager’s office and the two employee associations and should be finalized soon. These contributions would begin next fiscal year.

• Place all new hires into the statewide LAGERS plan. Tier 2 employees — those hired after July 1, 2006 — can elect to go in, and a preliminary count by the employee associations revealed that “about 95 percent” likely will elect to go into LAGERS as the benefits are similar. There are 63 employees in the Tier 2 plan. This effectively closes all City pension plans.

• Put all net proceeds from future telecomm lawsuits into to Pension Fund. Burris said some Councilmembers had mentioned that the City might need some flexibility on how to apply this money if the Pension Fund gets onto more solid footing. Burris recommended for consideration an 80 percent threshold — if the Fund is more than 80 percent funded, the Council would have flexibility to use these proceeds for the City budget, but if its under 80 percent it must all go into Pension Fund. He also pointed out that Council may decide that where the money is most needed “could very well still be the Pension Fund” even if the funded level is more than 80 percent.

• Restructure the Pension Board as recommended by Task Force.

• Sell City-owned properties, now identified, and when possible put net proceeds into the Pension Fund. The City is taking inquiries about the properties right now.

Most of the discussion centered on the amount the resolution says the City will pay into the fund. The Task Force recommended putting 35 percent of Police and Fire payroll into the fund, though this number was chosen somewhat arbitrarily by that group and was not based on any formulas.

However, Councilwoman Cindy Rushefsky said she was concerned that the public may perceive that the City is not making good on all the Task Force recommendations by paying 30.88 percent of payroll instead of 35 percent.  That could crush the November effort, she said, if the perception is that the City is paying less while taxpayers and employees are paying more. Mayor Jim O’Neal pointed out that this is actually a two percent increase over what the City was paying before, but less than the Task Force had recommended. He said the money is needed to put more cops and firefighters on the street. Rushefsky said she didn’t disagree, but “perception is reality” and voters need to know the City is doing everything it can to address the issue. Nick Ibarra agreed and asked how often City officials would be able to explain this minutia to citizens without their eyes glazing over. The Mayor agreed, saying that earning trust with the public was the most important aspect of the resolution.

“What we’re tying to do here is add value to this proposal and help ensure it (the sales tax) gets passed,” Mayor said.

The Council eventually settled on taking a closer look at exactly how much 35 percent would be in dollar terms. New calculations will be run as to what 35 percent of all wages would put into the fund, and these numbers will be presented to Council soon, likely next week.

John Rush then asked about language. Though it is written that the City will commit to these actions during the five–year lifetime of the tax, a Council cannot bind the actions of a future Council under the City Charter. Rush asked if anything could be written into the resolution to counter that. That’s not an option under the Charter, however, and future Councils will have to continue to keep the promises.

Mayor O’Neal said it’s an “issue of trust.” Rushefsky agreed, adding, “Ultimately our credibility as individuals and as a group is on the line.”

posted by Mike Brothers, Public Information

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